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Sinking sales

A yacht at Bahia Bleu Marina gets a scrubbing and a rinse. (Carl Elmore/Savannah Morning News)

It's enough to make you seasick.

Home sales, car sales and now boat sales are dropping like an anchor because of the economy.

"The boating business is the worst I've seen it," said Len Jordan, general manager of A Boater's Paradise in Thunderbolt and president of the Savannah Marine Dealers Association. "I personally think it will get even worse."

Jordan, who has been in the boating industry for 30 years, said sales are off 35 percent for him because of the price of gas, consumer credit card debt and banks cutting back on boat loans.

Clint Wallace, service and parts manager at Savannah Water Sports on Ogeechee Road, estimated new-boat sales are 50 percent lower than last year.

Because of the economy, fuel prices and it being an election year, "people are scared to purchase," Wallace said.

It's hitting young families especially hard.

"Right now, they're worried about the future," he said.

Middle- and lower-income purchasers are being left out, Jordan said.

"The only ones who can afford boats are the upper 10 percent of the nation."

Making changes

People who are buying boats are choosing to buy used.

"Used boats are selling six to one over new boats," Jordan said. "It's a good time to buy because prices are real low."

Those who do have boats are using them less frequently.

"People aren't going out like they used to," said Chris Fennell, an employee at Bahia Bleu Marina in Thunderbolt.

"People who used to go boating three to four times a month, they're now going once or twice a month," Jordan said.

There's been a drop in boat storage at Bahia Bleu, Fennell said. The storage facility used to have 95 percent occupancy and now is only about 80 percent to 85 percent full.

People are generally keeping their boats at home if they're not in storage.

"A lot of people are having to pay $150 to $400 a month depending on whether it's wet or dry" storage, Jordan said. "It's too much for the average consumer at this time to pay along with the price of fuel."

The rising price of diesel gas is not helping boat owners.

"It's just one more big problem," said Marisa Thompson, an equity analyst with Morningstar, an investment research firm. "Diesel is very expensive. If you have a 50-gallon tank, it's big bucks to fill it up.

"Fuel prices will only help to deter new boat owners and prospective buyers."

Fennell said people are buying smaller boats than before, with more efficient engines.

"People who have the money are still going to fill up their boats."

The housing correlation

While high gas prices are impacting sales of most goods, those in the boating industry say the downturn in the housing market is the primary cause of tepid sales.

Although final figures are not in yet, Thom Dammrich, president of the National Marine Manufacturers Association, expects sales from 2007 to be 7 percent to 10 percent lower than in 2006 and for 2008 to fare about the same.

"It's driven by a combination of decline in housing sales and higher interest rates," he said.

Sales of boats had surged from 2002 to 2006, Thompson said.

"Boat sales were buoyed by a time when consumers were able to extract extra money from their home equity," she said. "It helped propel boat sales forward. ... It's quite clear they were exacerbated by problems in the housing market."

The correlation between existing-home sales and new-boat sales is significant, Dammrich said.

"A lot has to do with the wealth effect. People perceive their house is now worth less, and it's compounded by the stock market downturn as well."

People are starting to browse boats for sale, but their uncertainty about the market is causing them to hold back on purchases.

"It seems like it will get worse before it gets better," Thompson said.

Dammrich predicts boat sales will rebound when the housing market starts to come back, which could be late in 2008 or 2009.

"The boating industry is cyclical," he said. "We go through downturns, then bounce back. The industry usually emerges stronger and healthier."

Keep on fishing

The local fishing market hasn't seen the slowdown that's impacting the rest of the boating industry, said Ray Golden, owner of Tybee Island Bait & Tackle.

In fact, sales are up roughly 26 percent for Golden.

"The fishing business isn't all that affected by the economy," and it's the top recreational activity in the world in terms of dollar amount, he said.

He acknowledged fewer boats seemed to be going out on the water, and he has seen more boats for sale than usual.

"People have come in and wanted to know if anyone was looking to buy a boat," Golden said.

Fennell said recently he has seen groups of four or five people going on a fishing trip together in one boat, instead of maybe one or two people.

Gas prices are impacting transporting boats more than the actual operation of the boats, and inshore fishing especially doesn't involve a lot of miles, Golden said.

He recently had customers who hired a captain to take them fishing because taking their own boat down would have cost too much in gas for their vehicle.

"But most people who have boats can afford them," he said.

Some segments booming

One silver lining in the economy is that boat sales to international buyers have increased because of the value of the dollar. They're helping make up the difference for the decline in domestic sales nationwide, Dammrich said. International sales make up 20 percent or more of boat sales at some domestic boat dealers.

They make up about 25 percent of sales at A Boater's Paradise.

Jordan said he's been selling and shipping boats to Australia, Russia, Estonia and other nations.

Twenty-five percent of his sales are in Chatham County, and 50 percent are to other areas in the U.S. Before the boating downturn, about 75 percent of Jordan's sales were in Chatham County, 15 percent of sales were to buyers in the rest of Georgia and other states, and 10 percent were international sales.

Locally, an alternative to buying a boat has been getting some attention.

Instead of purchasing new or used boats, some are turning to membership with the Freedom Boat Club in Thunderbolt. It offers more of a "time share" option, where members can use a boat that's owned and maintained by the club.

The Freedom Boat Club is not feeling a pinch from the economy, said Steve Sherman, membership executive director.

"New-boat sales are off, but we're about half the cost of owning a boat," he said.

Sales for club membership have been about the same as last year and have held steady.

"People aren't buying boats in the middle of summer," but they might join the club, Sherman said.

The club has been open for three years in Savannah and has a fleet of 11 boats.

Georgia boating statistics

Ranked ninth in new powerboat, motor, trailer and accessory sales with $488,408,000 in 2006 - a 17 percent increase over 2005.

Ranked 13th in boat registrations with 336,579 in 2006 - a 5 percent increase over 2005.

Ranked 25th in active marinas with 118, accounting for 8,876 slips in 2006.